The secret to creating a hit habit-forming product or game

The hottest book in Silicon Valley currently is Hooked: How to Build Habit-Forming Products by Nir Eyal, and for good reason; it is an incredibly valuable book for building a business. As Eyal points out, amassing millions of users is no longer good enough. Companies’ economic value is a function of the strength of the habits they create. User habits become a competitive advantage. Products that change customer routines, where users become hooked, are less susceptible to attacks from other companies.

Users who continually find value in a product are more likely to tell their friends about it. Frequent usage creates more opportunities to encourage people to invite their friends, broadcast content, and share through word-of-mouth. Hooked users become brand evangelists: Megaphones for your company, bringing in new users at little or no cost.

Habit-forming products change user behavior and create unprompted engagement. The aim is to influence customers to use your product or play your game on their own, repeatedly, without relying on overt calls-to-action such as ads or promotions. Once a habit is formed, the user is automatically triggered to use the product during routine events such as waiting in line at Starbucks. Eyal uses the Hook Model to show how to create a product or game that become habit forming for users, that have a long term competitive advantage and are more likely to generate word of mouth.

The Hook Model

The Hook Model describes an experience designed to connect the user’s problem to a solution frequently enough to form a habit. Eyal defines habits as behaviors done with little or no conscious thought. The convergence of access, data, and speed is making the world a more habit-forming place. – Businesses that create customer habits gain a significant competitive advantage. It has four phases: trigger, action, variable reward, and investment.

Triggers

The first step of the Hook Model is triggers. Triggers cue the user to take action. There are two types of triggers, external and internal. Habit-forming products start by alerting users with external triggers like an email, a website link, or the app icon on a phone. An external trigger communicates the next action the user should take. Online, an external trigger may take the form of a prominent button, such as the Play Now button on many games. When users start to automatically cue their next behavior, the new habit becomes part of their everyday routine.

According to Eyal, there are four types of external triggers you can use to create a habit forming product:

Paid Triggers. Paid triggers include advertising, search engine marketing, and other paid channels are commonly used to get users’ attention and prompt them to act.

Earned Triggers. Although not directly bought, earned triggers often require investment in the form of time spent on public and media relations. Valuable earned triggers include favorable press mentions, hot viral videos, mentions in relevant and featured App Store placements. With earned triggers, Eyal points out you may be lulled into thinking that related downloads or sales spikes signal long-term success, yet awareness generated by earned triggers can be short-lived. For earned triggers to drive ongoing user acquisition, companies must keep their products in the limelight—a difficult and unpredictable task.

Relationship Triggers. Word of mouth creates relationship triggers, where one person telling others about a product or service is a highly effective external trigger for action. Whether through an electronic invitation, a Facebook “Like,” or conversation at the water cooler, product referrals from friends and family are often a key component of technology diffusion.Some companies, especially in the game space, use viral loops and relationship triggers in unethical ways by deploying so-called “dark patterns.” When designers intentionally trick users into inviting friends or blasting a message to their social networks, they may see some initial growth, but it comes at the expense of the social currency of users, including their goodwill and trust. When people discover they have been tricked, they vent their frustration and stop using the product. Thus, the trigger has a counter-productive long-term impact.

Owned Triggers. Owned triggers consume a piece of real-estate in the user’s environment. They consistently show up in daily life and it is ultimately up to the user to opt into allowing these triggers to appear. For example, an app icon on the user’s phone screen, an email newsletter to which the user subscribes, or an app update notification only appear if the user wants it there.

As mentioned above, in addition to external triggers, there are internal triggers. When creating a habit-forming product, it is these internal triggers that lead to success. When users form habits, they are cued by an internal trigger rather than an external trigger. When a product becomes tightly coupled with a thought, an emotion, or a pre-existing routine, it leverages an internal trigger.

Internal triggers tell the user what to do next through associations stored in the user’s memory. Negative emotions frequently serve as internal triggers. To build a habit-forming product, makers need to understand which user emotions may be tied to internal triggers and know how to leverage external triggers to drive the user to action.

Actions

The next step in The Hook model is the action phase. The trigger, driven by internal or external cues, tells the user of what to do next. If the user does not take action, then the trigger is useless. To initiate action, doing must be easier than thinking. A habit is a behavior done with little or no conscious thought.

There are three ingredients required to initiate any and all behaviors:

The user must have sufficient motivation.

The user must have the ability to complete the desired action.

A trigger must be present to activate the behavior.

The above can be visualized using Stanford Professor BJ Fogg’s Behavior Model. Fogg’s model shows that elements must converge simultaneously for an action to occur, represented in a formula, B = MAT, which shows that a given behavior will occur when motivation, ability, and a trigger are present at the same time and in sufficient degrees.

While a trigger cues an action, motivation defines the level of desire to take that action. What motivates some people will not motivate others, so you have to understand the desires of your targets. Also, negative emotions such as fear can be powerful motivators. While internal triggers are the frequent itch experienced by users throughout their days, the right motivators create action by offering the promise of desirable outcomes.

Eyal goes on to explain, basing his analysis on Denis Hauptly’s Something Really New: Three Simple Steps to Creating Truly Innovative Products, that the process of innovation is based on simplicity. First you need to understand the reason people use your product or service. Then, lay out the steps the customer must take to get the job done. Finally, once the series of tasks from intention to outcome is understood, keep removing steps until you reach the simplest possible process. Consequently, any technology or product that significantly reduces the steps to complete a task will enjoy high adoption rates by the people it assists.

The ease or difficulty of doing a particular action impacts the likelihood that a behavior will occur. To successfully simplify a product, we must remove obstacles that stand in the user’s way. While people initially discounted Twitter’s 140-character message limitation as gimmicky and restrictive, little did they realize the constraint actually increased users’ ability to create. A few keyboard taps and users were sharing.

Eyal again looks at research from BJ Fogg to understand the key elements of simplicity. There are six elements:

Time How long it takes to complete an action.

Money The fiscal cost of taking an action.

Physical Effort The amount of labor involved in taking the action.

Brain Cycles The level of mental effort and focus required to take an action.

Social Deviance How accepted the behavior is by others.

Non-Routine How much the action matches or disrupts existing routines.

The action phase of the Hook Model incorporates Fogg’s six elements of simplicity by asking designers to consider how their technology can facilitate the simplest actions in anticipation of reward. The easier an action, the more likely the user is to do it and to continue the cycle through the next phase of the Hook Model.

To increase the desired behavior, ensure a clear trigger is present, then increase ability by making the action easier to do, and finally align with the right motivator. Every behavior is driven by one of three Core Motivators: seeking pleasure or avoiding pain, seeking hope and avoiding fear, seeking social acceptance while avoiding social rejection.

Variable rewards

What differentiates the Hook Model from all a regular feedback loop is its ability to create a craving. Feedback loops are all around us, but predictable ones do not create desire. Introducing variability multiplies the effect, creating a focused state, which suppresses the areas of the brain associated with judgment and reason while activating the parts associated with wanting and desire.

To support this point, Eyal cites a study exploring blood flow in the brains of people wagering while inside of an MRI machine. The test subjects played a gambling game while the researchers looked at which areas of their brains became more active. The startling results showed that the nucleus accumbens was not activating when the reward (in this case a monetary payout) was received, but rather, in anticipation of it. The study revealed that what draws us to act is not the sensation we receive from the reward itself, but the need to alleviate the craving for that reward.

Moreover, the rewards do not need to be just for the individual. Rewards of the tribe, or social rewards , are driven by our connectedness with other people. Our brains are adapted to seek rewards that make us feel accepted, attractive, important, and included.

Only by understanding what truly matters to users can a company correctly match the right variable reward to their intended behavior. Variable rewards are not magic fairy dust that a product designer can sprinkle onto a product to make it instantly more attractive. Rewards must fit into the narrative of why the product is used and align with the user’s internal triggers and motivations.

Investments

The final step of the Hook Model is where the user does a bit of work. The investment phase increases the odds that the user will make another pass through the hook cycle in the future. The investment occurs when the user puts something into the product of service such as time, data, effort, social capital, or real money. Investments in a product create preference because of our tendency to overvalue our work, be consistent with past behaviors, and avoid cognitive dissonance.

The investment phase must come after users have received variable rewards, not before. The timing of asking for user investment is critically important. By asking for the investment after the reward, the company has an opportunity to leverage a central trait of human behavior.

The investment phase, though, is not about users opening up their wallets and moving on with their day. Unlike the Action Phase, which delivers immediate gratification , the Investment Phase is about the anticipation of rewards in the future. Rather, the investment implies an action that improves the service for the next go-around. Inviting friends, stating preferences, building virtual assets, and learning to use new features are all investments users make to improve their experience. Little investments, such as placing a tiny sign in a window, can lead to big changes in future behaviors.

Higher LTV

Fostering consumer habits is an effective way to increase the value of a company by driving higher customer lifetime value (LTV). As I have written previously, lifetime value is the lifeblood of your business. A higher lifetime value allows you to acquire more and more users, a low lifetime values puts you in a death spiral. By following the Hook Model, you are improving all the factors that impact lifetime value. Most directly, you are improving retention, which is critical to having a high LTV. Thus, if you build your product or game incorporating the four steps of the Hook Model, you are more likely to achieve an LTV conducive to growth.

Creating a hit product

With the Hook Model, you have the steps for building effective hooks: 1. What do users really want? What pain is your product relieving? (Internal Trigger) 2. What brings users to your service? (External Trigger) 3. What is the simplest action users take in anticipation of reward, and how can you simplify your product to make this action easier? (Action) 4. Are users fulfilled by the reward, yet left wanting more? (Variable Reward)

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Author: Lloyd Melnick

I am EVP Casino at VGW, where I lead the Chumba Casino team. Previously, I was Director of StarsPlay, the social gaming vertical for the Stars Group (PokerStars, Sky Betting & Gaming, BetEasy, Full Tilt and BetStars). I was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where I led VIP CRM efforts and arranged licensing deals. I have been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million.
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Lloyd Melnick

This is Lloyd Melnick’s personal blog. I am EVP Casino at VGW, where I lead the Chumba Casino team. I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.